December lean hogs advanced 1.725 cents on volume of 35,453 contracts. Total open interest increased by 1,041 contracts, which relative to volume is approximately 5% above average. As this report is being compiled on October 7, the December contract has reversed course and is trading 50 points lower on the day, but has not taken out yesterday’s print of 42.050, which is above the contract low of 41.100 made on October 5. Stand aside.
WTI crude oil:
November WTI crude oil advanced 61 cents on volume of 1,146,431 contracts. Volume increased from October 5 when the November contract gained $1.14 on volume of 1,069,463 contracts and total open interest increased by 37,894. On October 6, total open interest increased again, this time by 31,514 contracts, which relative to volume is average. During the rally, which began several days ago after the announcement by key OPEC countries to restrict production, open interest relative to price advances has been very positive.
As this report is being compiled on October 7, the November contract is having its first pullback since generating short and intermediate term buy signals on September 29 and has made a daily low of 49.40, which is above yesterday’s print of 49.33. Crude should continue to pullback for at least another couple of days and then will likely attempt to test today’s high of 50.74, the high for the move thus far. For now, stand aside.
December gold lost $15.60 on volume of 207,617 contracts. Remarkably, volume declined from October 5 when the December contract lost $1.10 on volume of 234,725 contracts and total open interest declined by a massive 21,425. On October 6, total open interest declined again, this time by a sizable 12,059 contracts, which relative to volume is approximately 140% above average indicating that heavy liquidation continues in New York gold.
From September 27 through October 6, total open interest has declined by 88,633 contracts while the December contract has lost $ 91.10 in this time frame. This week’s COT report, which will be released today will be calculated through Tuesday October 4. Once the report is released, we will have a fix on the extent to which managed money has liquidated long positions.
As this report is being compiled on October 7, the December contract is trading lower again, down $6.20 and has made a new low for the move of 1243.20, which is the lowest print since 1242.70 made on June 7. This has penetrated the 200 day moving average of 1259.90 and the year to date moving average of 1266.60. The damage done to the chart means that gold will undergo a process of repair before it can resume its rally. The next area of major support is the May 31 low of 1207.00. Stand aside.
December silver lost 35.00 cents on volume of 75,176 contracts. Total open interest declined by 2,974 contracts, which relative the volume is approximately 25% above average. As this report is being compiled on October 7, the December contract is trading 3.00 cents lower on the day and has made a daily low of $17.115, which takes out yesterday’s print of 17.140 and is the lowest price since 17.08 made on June 9. December silver remains on short and intermediate term sell signals. Stand aside.
From the October 5 research note on silver:
“Like gold, December silver is trading below its 200 day and year to date moving averages. Since topping at 21.225 on July 5 through today’s low the December contract has fallen $4.00. Looking at the chart, the strongest area of support appears to be in the low $16.00 area which was support in the late May early June time frame.”
December British pound lost 1.47 cents on volume of 125,563 contracts. Total open interest increased by 2,239 contracts, which relative to volume is approximately 25% below average. As this report is being compiled on October 7, the British pound is experiencing its most volatile day since the days following the Brexit vote. In the early evening session yesterday, the December pound crashed nearly 6% and made a low of 1.2034, which is the lowest price recorded since the mid-1980s. Currently the pound is trading 1.46 cents lower on very heavy volume. Stand aside.
Dollar index: On October 6, the December dollar index generated an intermediate term buy signal after generating a short term buy signal on September 19.
December dollar index advanced by a very strong 65.8 points on volume of 26,495 contracts. Total open interest exploded higher, up 2,622, which relative to volume is approximately 300% above average meaning that aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move of 96.785.
As this report is being compiled on October 7, the December contract has made another new high for the move of 97.215, which is the highest print since 97.540 made on July 27. We have no recommendation.
S&P 500 E-mini:
The December S&P 500 E-mini gained 3.25 points on volume of 1,210,887 contracts. Total open interest declined by 748 contracts. As this report is being compiled after the release of the employment report by the US Department of Labor, the E-mini is trading 11.50 points lower and has made a daily low of 2138.00, which takes out yesterday’s print of 2143. 25 and is the lowest since 2136.00 made on October 4.
The December contract is getting close to generating an intermediate term sell signal and this will occur of the daily high is below OIA’s key pivot point for October 7 of 2144.67. A short term sell signal for the December E-mini occurred on September 12.
Many market participants may not realize that the S&P 500 cash index made its all-time high of 2193.81 nearly 2 months ago on August 15 and the December E-mini made its all-time high of 2184.25 on August 23. In essence, the S&P 500 has been moving in a sideways pattern and there needs to be a major catalyst to send the market skyward or substantially lower. Stand aside.